In recent years, China has been a convenient scapegoat when things go wrong in the global marketplace. China's banking sector is in trouble, debt levels in China are too high, China's real estate bubble is going to pop ... the list goes on. Countless headlines predict doomsday scenarios emanating from the belly of the dragon.
It's statistically inevitable that China's economic growth is slowing. Something that's already very big, whether it's an economy or a company, can't continue to grow at a rapid pace forever. China's economic growth has slowed to 6.5% a year, down from an average of 10% a year from 1991 to 2015.
Even though the world's second-biggest economy is slowing, it still adds 6.5% to $10 trillion each year. That means, even at 6.5%, China is adding the equivalent of four economies the size of Kuwait's (or roughly one Pennsylvania) every year. (What's the best way to invest in this growth? Click here to find out.)
As shown below, since 2000, China's GDP has grown more than 800% -- more than any other large economy in the world. The current fastest-growing large economy, India, has seen its GDP, or total economic output, grow by "only" 335% over the past 15 years.
GDP Per Capita Still Has Lots of Room to Grow
Relative to the U.S. and other developed economies, China's GDP per capita is low. That's because all this rapid growth is spread among 1.3 billion people.
The average GDP per capita (which is roughly a measure of how much wealth is created per person) in the U.S. is more than $55,800. For Singapore, it's near $53,000. China's GDP per capita is only a little more than $7,900.
How much more could China grow? If the U.S. is used as a benchmark, China could grow a lot more. The chart below shows the growth in U.S. GDP per capita since 1960 and China's GDP per capita growth since 2000.
In the graph above, the black line shows GDP per capita in the U.S. from 1960 to 2015. This was an incredible period of growth that led the global economy.
Now look at the red line. That's China's GDP per capita from 2000 to 2015. It closely tracks the growth of the U.S.'s GDP per capita.
China's current GDP per capita is about where the U.S. was in 1976. From that point, U.S. GDP per capita growth took off. Today, 40 years later, U.S. GDP per capita is more than $55,000.
We cannot predict the future. Like any economy, China's economy will have its ups and downs. But this graph gives you an idea of the kind of growth that could happen.
Chinese Middle-Class Consumers Will Drive Growth
It's important to note that China's future economic growth will differ radically from the past. Growth will not come from low-paid factory workers making plastic toys and cheap electronics.
Instead, Chinese consumers, led by China's booming middle class, will drive growth. People in China are spending more money on goods and services in their own country. Domestic consumption is slowly replacing China's old export-driven model of economic growth.
According to digital marketing consultants eMarketer, China will pass the U.S. as the world's largest retail market this year. That makes Chinese shoppers the world's biggest spenders.
And Chinese consumers are only getting started.
The Brookings Institution, an American think tank, projects China will account for 18% of total global middle-class consumption by 2030. Compare this to the U.S.'s middle class, which is expected to only make up 7% of the world's middle-class consumption by 2030.
By 2022, there will be at least 550 million middle-class Chinese. (Middle class is defined as households earning $9,000 to $34,000 per year.)
This growing class of consumers is a key driver of economic growth in China. This country is the epitome of a "rags to riches" story. And the tale has only just begun.
For details on what I think is one of the most compelling opportunities in Asia's market, click here.
Kim Iskyan is the founder of Truewealth Publishing, an independent investment research company based in Singapore. Click here to sign up to receive the Truewealth Asian Investment Daily in your inbox every day, for free.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.